First Citizens BancShares Inc. agreed to buy Silicon Valley Bank after a run on deposits wiped out the company in the biggest US bank failure in more than a decade.
The deal to settle SVB’s fate could help tamp down some of the turmoil that has engulfed the financial world, and shares of regional banks rallied on the news, with First Citizens up 44%.
The acquisition transforms First Citizens into one of the top 15 US banks, according to Bloomberg Intelligence, with help from some favorable terms. First Citizens is buying about $72 billion of SVB’s assets at a discount of $16.5 billion, according to an FDIC statement.
This leaves about $90 billion in securities and other SVB assets in the hands of the FDIC, and an estimated cost of the failure to the Deposit Insurance Fund of about $20 billion.
First Citizens said it will assume $56 billion in deposits, and 17 legacy branches will begin operating as Silicon Valley Bank, a division of First Citizens. There will be no immediate change to customer accounts.
The transaction is the second FDIC-assisted deal that sent shares of the acquirer soaring. New York Community Bancorp surged 32% on March 20 after taking over deposits and some of the loans at Signature Bank, which was seized by federal regulators on March 12.
Holding said SVB has complementary businesses, including private banking, wealth and small-business banking. The deal will also extend First Citizens’ reach into venture capital and technology businesses.